It’s not extreme to say that the Australian Taxation Office is conducting a brazen financial bombing campaign against small and family businesses across Australia.
Last week we informed you about the ATO’s taking a position where, at law and in its administration, it can (and is) creating and imposing tax debts where the taxpayer has not received any income. It’s gobsmacking but the High Court has said that this is ‘legal’ even though it also remarked that it’s clearly unfair. This is happening with family businesses using trusts—but watch the ATO expand this agenda.
Now we have more news of the ATO’s small business destruction campaign. In February the ATO released draft rulings that would declare family trust payments to adults to be illegal. What? This throws out decades of accepted, legal, small/family business income distributions. It would be like declaring that dividends from public companies (eg Telstra, BHP, CBA) were illegal. But more! Such declarations were to be backdated to 2015. So distributions that were legal over the last eight years could now be declared illegal. This is small/family business-hating, ATO madness.
Then last week, just before the election was called, the government and the ATO issued a ‘sort of‘ backdown. Well, not really. The statement says they’ll still deny distributions but will not apply them retrospectively. In other words, the attack continues but not as bad ‘sort of’!
There’s more for us to report on this intensifying ATO small/family business tax ‘bombing’ campaign. More pressing at the moment, however, is the need for solutions to fix this destructive ATO behaviour.
Jason Falinski MP has been the greatest friend of small business in the Australian Parliament over the last few years. He’s been doing real stuff. Not simply talking.
Jason chairs the parliamentary committee that keeps watch on the ATO. He’s guided and pushed the review that’s come up with some common-sense, balanced ATO reform recommendations. At the heart of these is a legislated ‘Taxpayer Rights’ Act. We reported on this in October last year.
Taxpayer Rights would:
- Ensure that the ATO could not collect a debt until all appeals have been finalised.
- Reverse the onus of proof of fraud or evasion so that it lies with the ATO.
- Establish the office of Taxpayer Advocate to ensure that the ATO complied with the Taxpayer Rights Act.
The ‘Falinski’ Report is a huge step forward for Australian small and family businesses in particular.
As we’re now in the full-blown election campaign period, we need to know from both Scott Morrison and Anthony Albanese where they stand on Taxpayer Rights. Frankly, it’s the critical issue for Australian small and family businesses.
If Scott Morrison and Anthony Albanese both remain silent on this issue, it really means that they both endorse the current anti-small business behaviour of the ATO.